L-1 Visa: Would You Like to set up a Branch or Subsidiary Business in the U.S.A.?

[HPretorius]

As I practice immigration law in Los Angeles, California, I often speak to fellow South Africans who are considering their options in terms of entering the U.S. to live and work, while at the same time acting as entrepreneurs. There is often a misconception that the only way to start up a business in the U.S. is to invest an exorbitantly large sum of money, like 1 million U.S. Dollars, which is in fact not true.

The L visa for example, allows one who owns and has been operating a business in South Africa for at least one year and who satisfies a number of other requirements, to apply for an L-1 visa if one wishes to establish a new branch or subsidiary business in the U.S. As one can imagine there are specific requirements that must be satisfied, such as proving that the S.A. and the newly created U.S. business are related in ownership, that there are sufficient funds to operate the new business , that the South African business will continue to operate while the L visa is being used etc., however it is a very useful visa that is available to South African entrepreneurs. With the L visa it is not even strictly necessary that the S.A. and U.S. businesses be in the same line of business or industry.

In addition, an L visa such as this allows dual intent, which means that a person could apply and enter the U.S. on an L visa and then if they decided that they wish to remain in the U.S. long term, petition for a green card without losing their L visa status.

I thought I would post this brief visa background not as advice but in part to help educate those who are interested in immigrating to the U.S. about the fact that there are visa options available and also to get some feedback perhaps on the prevalence of the misconception that the only way to enter the U.S. is to have 1 million dollars.

Hendrik Pretorius
www.mjlaw.co.za
Note that none of this information is intended to be taken as legal advice.

[Yvonne]

Question on Visa Application

The L visa for example, allows one who owns and has been operating a business in South Africa for at least one year and who satisfies a number of other requirements, to apply for an L-1 visa if one wishes to establish a new branch or subsidiary business in the U.S. As one can imagine there are specific requirements that must be satisfied, such as proving that the S.A. and the newly created U.S. business are related in ownership, that there are sufficient funds to operate the new business , that the South African business will continue to operate while the L visa is being used etc., however it is a very useful visa that is available to South African entrepreneurs. With the L visa it is not even strictly necessary that the S.A. and U.S. businesses be in the same line of business or industry.

In addition, an L visa such as this allows dual intent, which means that a person could apply and enter the U.S. on an L visa and then if they decided that they wish to remain in the U.S. long term, petition for a green card without losing their L visa status.



Hendrik Pretorius
www.mjlaw.co.za
Note that none of this information is intended to be taken as legal advice.

Henrik, thanks for this information, can you give any forum members an approximate idea of what they need to budget for the costs of this visa? I realise there are variables, but a ballpark figure would be of great assistance to anyone considering this visa.

Thanks
Yvonne

[HPretorius]

Hi Yvonne,

I would encourage any interested parties to contact me directly to discuss their specific cases. Please visit www.mjlaw.co.za from where you can easily send me an e-mail. I would be more then pleased to discuss any fee issues at that time. The fees vary over time so I would not want to list a cost and then have it become outdated at a later time.

Thank you for your comment Yvonne,

Regards,

Hendrik Pretorius
www.mjlaw.co.za
www.los-angeles-immigration.com

[Dave A]

Not even an example?

I don't know how everyone else feels, but for me an unwillingness to provide any level of detail does not inspire confidence in the "expert."

[Loman]

No, because I'll never again move out of Africa.

Where else but in Africa is there such wonderful business opportunities with such big profits?
Take this one for example:

On my last trip through southern Africa my windscreen was stolen.
But only shortly after i realized this and finished with the cursing
a young fellow walked by and asked if i would like to buy this
windscreen he is taking to his uncle.
It appeared to be in great condition and the price was quite cheap.
Only the screen was mine to begin with.

[Yvonne]

Are there any members of the forum who have an existing business in South Africa and have applied for this visa - based on a new branch or subsidiary business in the U.S.A.?

Or is there any member who is considering trying to obtain this visa?

Yvonne

[Dave A]

I had a little look at the requirements for an L1 Visa when Hendrik first joined. To my eye it looked like it's intended for staff of international corporates and the requirements that need to be met are fairly stringent.

My sense was that it would be easier/more likely to get a greencard on the $1 million capital method than to structure your affairs to meet the L1 requirements for the average owner-managed business owner.

[HPretorius]

The L Visa can be used in two capacities, the one being to exchange employees between a Foreign and U.S. based company that has already been established. The second use allows persons who have a business in a foreign country, assuming other requirement's are met as well, to enter the U.S. to open a new affiliate business and bring over an employee of the Foreign company to the newly established U.S. operation.

In terms of the $1 million green card petition, although that option is often easier, we are of course assuming that the "average owner-managed business owner" is able to invest that sort of money. That is precisely one of the main advantages of the L Visa, in that the amount of money that needs to be invested can often be fairly minimal depending on the industry of course.

[Yvonne]

I estimate a budget of approx R35,000 - R50,000 for the visa application costs.

At least US$ 50,000 - $ 80,000 for basic food and shelter, for 9- 12 months whereafter the business would have to support you and your family, so ideally the business cannot be a risk venture, but a definitely viable business.
Ideally with some additional financial support coming from South Africa if you wish to maintain your current standard of living.

Living costs vary dramatically between cities in the US so this would need to be taken into consideration.

It is almost impossible to purchase anything on credit when you in the US on a visa.
So you may need sufficient cash for a vehicle. (Average ZAR 160,000 - 250,000 for a new vehicle, and used vehicle : ZAR 100,000 - 160,000 - for anything half decent!)

Then of course the funds in the US bank for the business, required to satisfy the visa requirements depending on the business itself.

Travel and moving costs will take a big chunk of your assets.

Please note, this is a rough estimate based on our own experience within the last few months:
Our cost for the visa and legal fees to register the business etc. was ZAR 80,000.

Do get comparison quotes from immigration lawyers, but better still, make sure you find someone who has obtained a visa and is willing to provide a personal reference.
Some immigration lawyers take months to submit the application, in fairness, this could be due to the client not supplying sufficient information, or be the "normal" procedure,
most people we have spoken to say it is between 1 - 6 months:
Our first legal meeting was in July 2008, the submission was denied mid October, another application was made in November and granted in December. We altered the application to a "transfer" application, when the "business" application failed.

So even for a non-immigrant visa, it could take over 6 months.

If your age excludes you from attempting to formally immigrate, it is the only way to even have a hope of eventually applying for a green card in the U.S. so if you have the finance, and this is something you are seriously considering, it is possibly the best option available to you.

Yvonne

[Dave A]

How are you going managing keeping an eye on your SA business from a distance, Yvonne?

[Yvonne]

We started planning a long time ago.

First to get my daughter and grandson settled in the U.S. (they are on a L visa.)

Then we looked at the feasibility for ourselves to be able to come and go in the U.S. at will.

We were a family owned business, Husband, myself and daughter, so it was difficult for the business, but not impossible!

Our daughter left the company in 2007 and came to work for the same franchise in the U.S. but as an employee on transfer.

Major loss to our company, but we survived.

Then we started handing over any aspects of our own responsibilities which required us to be on-site, from about a year ago.

So a long term strategy is crucial for anyone wanting to go the same route we have.

The largest problem is that we have insufficient profit to enable "understudy" employees! so we have to do everything we can to retain our present experienced employees.

Another challenge facing any business trying to operate remotely is trust.
Fortunately at this time we have total trust in our managers, and have given them a small shareholding to try to ensure they have a vested interest.

It is the "day to day control" that will be the most difficult, if one of our employees should not be available for any reason, so realistically at this point we do have substantial problems!

To work remotely - we put in a server, and aimed to set it up so that we had a finger on everything through processes and procedures. Purchased a C.R.M. program, to date that is not operational though! so lots to still achieve.

I have a strange routine whilst here in the U.S. in that I try to be available from 3.am. - 9 a.m. - South African time 11 a.m. to 5 p.m. I am still the only one to have the password to "alter" any accounting issues. Confirmation of Instructions for banking etc.

We are extremely fortunate in our specific niche market, which permits the possibility of "remote" control.

I was here in the U.S. for six months last year, and my husband and I have both been here for two and a half months as a trial period.
We return next week to South Africa - So far, so good?
Our employees assure us that there are no problems, so we hope that they are not keeping any problems or bad news for our return!

The real feasibility of retaining and operating our business in South Africa will depend totally on our employees, so we have to sell them the concept that they truly "own" their own jobs.
One issue we have is to develop an incentive program for employees which will not be seen as a disadvantage, should we decide it is not feasible to work remotely and wish to sell the company.
So employee incentives without any "unintended consequences" has to be developed.

We have also had to set up a small "cushion" of cash flow, but will without question not operate the business "at risk", our main criteria will be a constant check that the business remains financially viable.

This is quite a liberating aspect, as previously "everything" was tied up in the company, the constant fear of staying viable was massive!
As with many SME owners, we had made the mistake of thinking our business would "look after our retirement", this is not true as basically we "owned our own employment".
The fear of course has shifted to will we earn sufficient to fund ourselves in the U.S!

We are torn apart at leaving South Africa, at no time, even when most of our friends decided to leave, did we ever think we would even consider it!
Risking everything, including our business was just not a consideration, but now we feel whatever our financial cost, we want other options!

We used to say that when we felt a need to carry a gun, we knew it was time to leave! We still have no desire to carry a gun! but definitely feel a need for protection!

Having our grandsons future as our ultimate priority, and wanting to be around to watch him grow, made the decision easy in the end.

Taking him to baseball practise at night, parking on a dark field, walking to the vehicle without fear! Standing chatting without watching that there are still lots of cars around, it took some time to stop checking behind trees and bushes!
We walk to a nearby restaurant at night!
These are the small things that make our future worthwhile.

Whether we are making a major mistake or not, we are now committed, and now have the challenge of a lifetime to keep the South African business viable.

Yvonne

[duncan drennan]

This is quite a liberating aspect, as previously "everything" was tied up in the company, the constant fear of staying viable was massive!
As with many SME owners, we had made the mistake of thinking our business would "look after our retirement", this is not true as basically we "owned our own employment".
The fear of course has shifted to will we earn sufficient to fund ourselves in the U.S!

Wow! I just want to say well done to you It is really so amazing and fascinating how this move has forced a mindshift. I hope to one day make the same moves forward with my business. I have a lot of respect for what you have achieved.

Taking him to baseball practise at night, parking on a dark field, walking to the vehicle without fear! Standing chatting without watching that there are still lots of cars around, it took some time to stop checking behind trees and bushes!
We walk to a nearby restaurant at night!
These are the small things that make our future worthwhile.

That particular freedom is amazing. I hope to see it here in SA within my lifetime.

[Dave A]

I hope you'll see your way clear to keep the open flow of feedback going, Yvonne. I'm really appreciating the perspective it's bringing.

There's two things in particular I'm looking forward to hearing over time:

• How the remote control works out over time, and
• The differences between running a business in SA vs USA.

[HPretorius]

Green Card from L-1A status

I thought it pertinent to briefly discuss the benefit that an L visa provides in terms of getting a green card, because once you get a green card then you no longer have to worry about keeping the S.A. business operational. Once you have a green card you are then free from the restrictions of the L visa and can even close down your U.S. and S.A. businesses if you so wish.

If you are granted an L-1 visa as a manager or executive level employee, and not a specialized knowledge employee, then you are at a major advantage in terms of processing times when applying for a green card. To understand this it is useful to know how the employment based (as opposed to family based, e.g. marrying a U.S. Citizen) green card petition process works:

As a very basic overview, the EB (Employment Based) green card petitions get broken down into 5 categories, the first three of which are based on educational background, work experience, job position, etc. The EB-1 category is intended for "Priority Workers" for persons with "extraordinary ability" in their field. Generally this priority group is extremely difficult to get into as it requires a person who has achieved a very high level of acclaim in their field, as evidenced through internationally received awards etc. As such, there are not very many petitions filed in this category and thus the processing times are far shorter then other EB categories, taking approximately 1-2 years to process as opposed to other another category which may take 4 years to process.

Further, when applying for a green card from an L visa, the beneficiary can use the U.S. company that he/she established as the petition/sponsor for the green card, which is another major advantage, as opposed to having to find a sponsoring employer.

Accordingly, one will not have to keep the S.A. company operational for an extended period of time if one does not wish to or if it does not make long term business sense.

Regards,

Hendrik Pretorius
Attorney at Law
Muston & Jack, P.C. - Los Angeles Branch
70 S. Lake Ave., Suite 1000
Pasadena, CA 91101
Telephone: 00 1 323.506.5388
Fax: 00 1 323.843.9879

https://www.mjlaw.co.za

https://www.los-angeles-immigration.com

[Yvonne]

Thanks Hendrik,

That was an interesting post.

It is sometimes difficult to decipher the technicalities:

L-1 visa as a manager or executive level employee, and not a specialized knowledge employee,

Is it possible to get a L-1 visa based on both an executive level employee and a specialized knowledge employee?

Which is how I think both my husband and daughters visa is granted? but not positive!

Would need to read our documentation to clarify.

But just wanted to ask for anyone else who may be interested?

Yvonne